Capital companies, anonymous and limited, are the most common and widespread legal form to support a business activity. Beyond single-member societies, it is clear that the relationship between partners is key. Now, what rights do shareholders or participants of a company have?
They are regulated in article 93 and ss of the Capital Companies Act.
In the terms established in this law, and except for the cases envisaged in it, the member will have, at least, the following rights:
- a) The one of participating in the distribution of the social gains and in the patrimony resulting from the liquidation.
- b) The one of preferential assumption in the creation of new shares or the preferential subscription in the issuance of new shares or bonds convertible into shares.
- c) To attend and vote at general meetings and to challenge social agreements.
- d) The information one.
We can divide these rights into two large groups, those with political content or linked to the management of society, and the economic ones, those that allow the participation of profits mainly through dividends.
On the other hand, these rights are not absolute and can be modulated by the statutes, the specific type of action or participation held, etc.
Social participation and actions can grant different rights. Actions that have the same content of rights constitute the same class. When several series are constituted within a class, all those that integrate a series must have the same nominal value.
For the creation of social participation and the issuance of shares that confer some privilege over ordinary ones, the corresponding formalities must be observed in their specific case.
Political rights are those that guarantee participation in the management of society. We can mention, among others, the following:
- The right of attendance, voice, and vote in the General Meetings: this right can be set at a minimum, or directly exclude some type of shares from it (in exchange for a privileged economic regime, the so-called non-voting shares). In principle, the decisions are made by the majority and in terms of the capital represented by the titles that each one possesses, but qualified majorities may be necessary or privilege, according to the legislation, certain type of actions.
- The right of information: it is the logical presupposition of the previous one sense to be able to exercise it is necessary to be aware of the progress of society. The shareholder’s access to the annual accounts, the management report and, in general, any document that will be approved by the Board must be provided. Of course, this includes requesting clarifications from the Board itself, although this is a point where frictions and discussions about access to speaking times and the answers given are common.
- Right to challenge corporate resolutions: shareholders and participants can legally challenge those resolutions of the Boards that violate the Law, the bylaws, or that prejudice the corporate interest. Through it, it protects itself and society.
- Right to social action of responsibility: beyond the scope of the decisions adopted in the Boards, to control the day to day of the management, the partners can exercise the social action of responsibility, when they consider that the managers are hurting the interests of the society.
- Right to convene a meeting: the members representing 5% of the company may request the directors to call a meeting, and if not attended, bring it before the courts.
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The economic rights allow the shareholder or participant to participate in the distribution of the social gains if any. Among the economic rights are, among others, the following:
- Right to the dividend: the shareholder or participant is entitled to the benefits distributed by the company among its partners, the dividend, depending on (with nuances) the capital contributed. It should be clear that the distribution or not of benefits is a decision of the General Board. Without benefits, there is no dividend, but if they have been generated, it does not imply the obligatory nature of their distribution.
- Preferential subscription right: this is the preferential right of the current partners to resort to capital increases or to the issuance of convertible bonds, in order to prevent their shares from being diluted. This right is valued economically and can be transmitted by the partners.
- Right to transfer shares or participation: consists of the right of the partners to dispose of the shares or participation. This right may be substantially limited statutorily or legally, being very frequent in limited companies and in many corporations to avoid the entry of undesired partners.
- Right to the liquidation fee: if the company is dissolved, the shareholder is entitled to its proportional share in the liquidation.
- The right of proportional representation in the Board of Directors, in the case of Corporations.
- Right of separation : in certain cases (substitution of the corporate purpose, transfer of the domicile abroad, transformation into limited partnership or collective and, attention, absence of distribution of benefits for more than 5 years in unlisted companies), the partners that do not have approved such agreements may claim from the company that the value of their shares is liquidated, leaving the company.